The Australian dollar has gone back and forth during the week as we continue to dance around just below the 0.68 handle. This is a market that of course is highly sensitive to the US/China trade relation situation, which of course continues to deteriorate. The Australian dollar is highly sensitive to the Chinese economy, which of course is being greatly influenced by the tariffs coming out of the United States. As long as that continues to be an issue, it’s very likely that the Australian dollar will continue to struggle.
AUD/USD Video 19.08.19
If we were to break down below the candle stick from the previous week, then the market could break down towards the 0.65 handle. That’s a major support level on the monthly chart, and I think the market is going to try to reach that level. Rallies at this point will more than likely find a ton of resistance at the 0.69 level above, so therefore I’d be more than willing to short this pair. At this point, the US dollar will more than likely be favored due to the fact that the Treasury market will continue to attract a lot of flow in a bit of a safety bid. Beyond that, the Reserve Bank of Australia looks very likely to ease its monetary policy going forward, and therefore it should continue to work against the value of the Aussie. All things being equal I continue to be negative until something changes between the Americans and the Chinese, and again that doesn’t seem to be very likely to happen in the near term.
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This article was originally posted on FX Empire
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